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April 2008

Anthony d’Offay deal with Tate and Scotland sets tax precedent for UK philanthropy

For his partial donation of £125m worth of art, the dealer received £26.5m—the price he originally paid for the collection—tax free

Dealer Anthony d’Offay’s partial donation of 725 contemporary works of art to the National Galleries of Scotland and the Tate sets a precedent in encouraging “lifetime giving” under the UK tax system. As part of a complex arrangement, he received a payment of £26.5m ($53.5m) for the works, which is what he paid for them when he purchased them over a period of 28 years. However, the art has increased in value substantially, and is now worth around £125m ($252m), according to Christie’s and Sotheby’s.

As part of a complex arrangement, he received a payment of £26.5m ($53.5m) for the works, which is what he paid when he purchased them over a period of 28 years

The works were owned by the company Anthony d’Offay Ltd, and when they were sold to the Tate and the National Galleries of Scotland (nearly all in the 2007/08 financial year), the proceeds were subject to corporation tax. The money then passed to D’Offay, who was liable to pay income tax on it. The sum of the corporation and income taxes due was £14.6m.

This was paid by the Department for Culture, Media and Sport (DCMS), which used funds from the sale of land originally allocated to the British Library. The money was paid to the Treasury, to reimburse them for the loss of the taxes.

Under the Taxpayer’s Charter, everyone should be treated alike, and this opens the possibility that similar deals could be negotiated by other owners who would like to make a package sale and donation to a public gallery.

This opens the possibility that similar deals could be negotiated by other owners who would like to make a package sale and donation to a public gallery

The D’Offay arrangement, announced on 27 February, covers 170 paintings and sculptures, along with 555 works on paper. The £26.5m sale element (plus other costs) was financed by the Scottish Executive and DCMS (£10m each), the National Heritage Memorial Fund (£7m) and the Art Fund (£1m). A £5m endowment is also being established, with the National Galleries of Scotland and the Tate putting up £500,000 each, leaving £4m still to raise.

D’Offay’s guiding principle has been to create “artist rooms”, with groups of works by individual artists. There are 50 such rooms, by 25 artists, including Joseph Beuys, Gilbert & George, Damien Hirst, Jeff Koons, Robert Mapplethorpe, Bruce Nauman, Gerhard Richter and Andy Warhol.

Some of these will be displayed in Edinburgh and London, starting from spring 2009. D’Offay has said that ideally his collection “needs a great new building in Edinburgh”, pointing to the positive impact of the Guggenheim in Bilbao. However, it is unlikely that the National Galleries of Scotland will pursue this idea.

D’Offay works will also be lent for temporary displays at partner regional galleries. These are in Aberdeen, Belfast, Bexhill, Cardiff, Colchester, Glasgow, Inverness, Middles­brough, Orkney, Walsall and Wolverhampton.

The collection will be managed by a committee comprising representatives from the National Galleries of Scotland and the Tate, D’Offay and several independent members. D’Offay will also be the ex officio curator for five years.

Although D’Offay is said to have retired and his gallery was “closed” in 2001, the accounts of his company show that it continues to actively deal in contemporary art. In 2005/06, Anthony d’Offay Ltd’s turn­over was £9.6m, yielding a profit of £4.7m.